CMS Announces New Repayment Terms for Medicare Loans Made to Providers During COVID-19

On October 1, 2020, the Department of Health and Human Services (HHS) announced that it will be disbursing another $20 billion in CARES Act Provider Relief Funds. Under this Phase 3 General Distribution allocation, physicians who have already received Provider Relief Fund payments may apply for additional funding that considers financial losses and changes in operating expenses caused by the coronavirus. The negative impact of the COVID-19 pandemic has increased anxiety and depression in the country, and behavioral health providers have continued to provide care through telehealth and other means. Thus, HHS is also announcing that the nation’s behavioral health care providers, including psychiatrists, are now eligible for funding. Previously ineligible physicians, such as those who began practicing in 2020, will also be eligible to apply.

New recoupment terms allow providers and suppliers one additional year to start loan payments. CMS announced amended terms for payments issued under the Accelerated and Advance Payment (AAP) Program as required by recent action by President Trump and Congress. This Medicare loan program allows CMS to make advance payments to providers, which are typically used in emergency situations. Under the Continuing Appropriations Act, 2021 and Other Extensions Act, repayment will now begin one year from the issuance date of each provider or supplier’s accelerated or advance payment. CMS issued $106 billion in payments to providers and suppliers to help alleviate the financial burden health care providers faced while experiencing cash flow issues in the early stages of combating the COVID-19 public health emergency.

CMS expanded the AAP Program on March 28, 2020, and successfully paid more than 22,000 Part A providers, totaling more than $98 billion in accelerated payments. This included payments to Part A providers for Part B items and services they furnished. In addition, more than 28,000 Part B suppliers, including physicians, non-physician practitioners, and durable medical equipment suppliers received advance payments totaling more than $8.5 billion.

Providers were required to make payments starting in August, but with this action, repayment will be delayed until one year after payment was issued. After that first year, Medicare will automatically recoup 25% of Medicare payments otherwise owed to the provider or supplier for 11 months. At the end of the 11-month period, recoupment will increase to 50% for another 6 months. If the provider or supplier is unable to repay the total amount of the AAP during this time-period (a total of 29 months), CMS will issue letters requiring repayment of any outstanding balance, subject to an interest rate of 4%.

The letter also provides guidance on how to request an Extended Repayment Schedule (ERS) for providers and suppliers who are experiencing financial hardships. An ERS is a debt installment payment plan that allows a provider or supplier to pay debts over the course of 3 years or, in the case of extreme hardship, up to 5 years. Providers and suppliers are encouraged to contact their Medicare Administrator Contractor for information on how to request an ERS. To allow even more flexibility in paying back the loans, the $175 billion issued in Provider Relief funds can be used toward repayment of these Medicare loans. CMS will be communicating with each provider and supplier in the coming weeks as to the repayment terms and amounts owed as applicable for any accelerated or advance payment issued.

For more information, see the announcement here: Announcement